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"Trickle Down" Has Failed; Wealth And Income Have "Trickled Up" To The Top .5%

RosieRosie Member, Permitted to post new threads

"Trickle Down" Has Failed; Wealth And Income Have "Trickled Up" To The Top .5%

Tyler Durdens picture
Mar 30, 2017 12:59 PM

Authored by Charles Hugh Smith via OfTwoMinds blog,

Central bank policies have generated a truly unprecedented "trickle-up" of wealth and income to the top .5%.

Over the past 20 years, central banks have run a gigantic real-world experiment called "trickle-down." The basic idea is Keynesian (i.e. the mystical and comically wrong-headed cargo-cult that has entranced the economics profession for decades): monetary stimulus (lowering interest rates to zero, juicing liquidity, quantitative easing, buying bonds and other assets-- otherwise known as free money for financiers) will "trickle down" from banks, financiers and corporations who are getting the nearly free money in whatever quantities they desire to wage earners and the bottom 90% of households.

The results of the experiment are now conclusive: "trickle-down" has failed, miserably, totally, completely.

It turns out (duh!) that corporations didn't use the central bank's free money for financiers to increase wages; they used it to fund stock buy-backs that enriched corporate managers and major shareholders.

The central bank's primary assumption was that inflating asset bubbles in stocks, bonds and housing would "lift all boats"--but this assumption was faulty. It turns out most of the financial wealth of the nation is held by the top 5%.

As for housing--yes, a relative few (those who happened to own modest bungalows in San Francisco, Seattle, Portland, Toronto, Vancouver, Brooklyn, etc.) on the left and right coasts have registered spectacular gains in home appreciation as the housing bubbles in these cities now dwarf the 2006-07 real estate bubble. But on average, the gains in home appreciation have barely offset the declines in real (adjusted for inflation) household income.

These charts illustrate the abject failure of the "trickle-down" economic theory.The majority of the assets that have soared in value are owned by the top 5%:

 

Wages as a share of GDP (gross domestic product, i.e. the nation's total economic activity) has been declining for decades:

 

The only segment of households who have registered gain in real income over the past 20 years is the top 5%:

http://www.zerohedge.com/news/2017-03-30/trickle-down-has-failed-wealth-and-income-have-trickled-top-5

"We are shaped by our thoughts; we become what we think. When the mind is pure, joy follows like a shadow that never leaves."

Comments

  • Matt_ADMIN_Matt_ADMIN_ Administrator
    -------------------
    "...Say, 'GOD is sufficient for me.' In Him the trusters shall trust." (Quran 39:38)
  • Good riddance, although whatever comes next will probably be even worse.
    People in this world look at things mistakenly, and think that what they do not understand must be the void. This is not the true void. It is bewilderment.
    - Miyamoto Musashi, The Book of Five Rings
  • RosieRosie Member, Permitted to post new threads
    The advent of AI, self driving everything, drones and robotic workers will only hasten the transfer of power from the lower/middle class and increase trickleup to the top 5%. Workers and consumers currently have power as they supply something. The scales are tipping too far in one direction. This is evident by unemployment and underemployment figures.

    "We are shaped by our thoughts; we become what we think. When the mind is pure, joy follows like a shadow that never leaves."

  • Matt_ADMIN_Matt_ADMIN_ Administrator
    Perhaps the shoveler, pragmatism, is what comes next, the burier of all erroneous human philosophies, to show us a new way towards truth, towards a way of life in which no one is exploited nor commanded?
    -------------------
    "...Say, 'GOD is sufficient for me.' In Him the trusters shall trust." (Quran 39:38)
  • Matt_ADMIN_Matt_ADMIN_ Administrator
    Perhaps the machines might even want to join us...
    -------------------
    "...Say, 'GOD is sufficient for me.' In Him the trusters shall trust." (Quran 39:38)
  • RosieRosie Member, Permitted to post new threads
    Perhaps the shoveler, pragmatism, is what comes next, the burier of all erroneous human philosophies, to show us a new way towards truth, towards a way of life in which no one is exploited nor commanded?

    Perhaps the machines might even want to join us...
    #1 would appear to be the only resolution
    #2 ....if not we could simply forget to recharge their batteries.

    "We are shaped by our thoughts; we become what we think. When the mind is pure, joy follows like a shadow that never leaves."

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